Karim Harji spoke to Tessa Hebb at the conclusion of Day 1 of the PRI Academic Conference held at Carleton University to get her views on the conference’s goals, and how social finance relates to responsible investing in Canada.

Why is this conference important?

The UNPRI is a critical vehicle for institutional investors to understand how to integrate ESG factors into their investment decision making. As an extension, the role of the academic network is to reinforce that work by providing solid credentialed research about RI and about the importance of these factors. At this year’s conference, we have a wide range of papers from international and Canadian academics and practitioners, including graduate students, to attempt to move forward the discussions around some of the key issues in RI – especially in light of the financial crisis, and some of the implications that have resulted.

How did 3ci get to host this international conference?

3ci is a member of academic network, and we also have a large research initiative at 3ci on RI that focuses on our role as a knowledge mobilizer that can convene and bridge divides that often exist between academics and practitioners. We see ourselves as a vehicle to encourage the co-production of knowledge, where academic research has practical relevance, and practitioners can meaningfully engage with some of the broader questions around RI. Building on first meeting in Maastricht last year, hosting this conference in Ottawa is a terrific opportunity to bring Canadian and international practitioners and researchers to connect with the PRI and PRI academic network.

What are the key questions you’re hoping to address at the conference?

The theme of this year’s conference is “The Next Generation of Responsible Investing”, where will examine the new directions in RI going forward. For the most part, RI has been seen in a pretty narrow definition which is mostly around influencing firms in public equities using shareholder resolutions, proxy voting, or corporate engagement with public companies held in the investment portfolio. A key theme that is now emerging is: how can RI be moved beyond that narrow definition to a broader one that applies to all asset classes, and what does that entail?

In reaching beyond this narrow definition, we can influence some of the broader social and environmental impacts and implications around RI – for example, around urban revitalization, climate change, etc. across different asset classes – and it is here where we begin to see the overlap between RI and social finance. Most of the papers from today (day 1), however, tended to focus on the financial crisis, fiduciary duty, and other key themes, but I’d encourage you to reference Steve Lyndenberg’s excellent paper which delves into this big question in a profound way.

What is the relationship between social finance and RI?

Social finance, or what I would also refer to as impact investing, is a natural extension of RI. In particular, the social component of RI can be delivered in the investment portfolio through impact investing. One of the things that I’ve found in my research over the past few months is that ‘impact investing’ as a term really appeals to the investor and their motivations, so perhaps this is a good way to bridge these worlds. Social finance as a term does not always resonate with this class of investors necessarily, as impact may be defined as going beyond social (to incorporate environmental and governance issues). However, while ‘impact investing’ as a term is gaining some traction in the US, the term ‘social finance’ dominates in the UK – and in Canada, we’re still at an early stage around defining and agreeing on these terms.

How do we bridge the gap between RI and impact investing in Canada?

To date, the groups concerned about impact investing and those working on RI have been silo’d. We need to find opportunities to bring them together. This will eventually be part of the work we hope to do at 3ci, since we are working on both areas. There is a conception that social finance is narrowly defined as capital for social enterprise, yet it really goes beyond that; impact investing describes a broader conception of capital for all forms of enterprise that yield positive environmental, social and economic outcomes.

One of the important reference pieces in this discussion is the Monitor report released earlier this year which speaks to both sides of this divide: large institutional investors and their representatives and why they would want to engage in this area, but also foundations and mission-related investing where there is the possibility of sacrificing some financial return in return for social impact. In Canada, I think, we can look to the findings and recommendations in this report as springboard of deepening the influence of social finance or impact investing, and the alignment with what is taking place around RI.

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